Sprint-Softbank Merger Gets ISS Blessing

The simple news is that investor advisory service Institutional Shareholder Services has put its imprimatur of approval on the proposed $20.1 billion acquisition of Sprint (NYSE: S) by Japan's Softbank, dealing an apparent blow to a higher, competing bid by DISH Network (NASDAQ: DISH) , which has offered $25.5 billion.

In a release issued by Sprint yesterday, ISS was quoted as saying: "Given the strategic merits of the SoftBank transaction, the sales and negotiation process overseen by the board, the strength of the valuation relative to precedent transactions, and the market reaction, a vote for the transaction is warranted."

However, according to The Wall Street Journal, ISS said it hadn't determined whether Dish's bid might provide shareholders a better deal, saying it's only a preliminary offer.

Nothing about this transaction is simple. Some say the real prize here isn't Sprint at all, but Clearwire (UNKNOWN: CLWR.DL) , which holds enormous amounts of spectrum that everyone covets. So Sprint is offering to buy the remaining piece of Clearwire it doesn't already own. Yet Clearwire's largest investor, Crest Financial, sees the bid undervaluing its assets and has mounted a number of defenses against it. In addition, both DISH and Verizon have made offers for Clearwire.

The Institutional Services pronouncement says a Sprint/Softbank merger will make the carrier a stronger competitor: "SoftBank's experience mastering this technology in building its own network -- arguably the fastest network in the world -- will be immensely helpful to Sprint as it is only beginning to focus on its own network improvements."

There are still numerous hurdles the deal would have to cross before it could be consummated, including receiving approval from the FCC and Sprint's shareholders. Assuming those are received and the additional offers outstanding are satisfactorily resolved, Sprint and SoftBank anticipate the merger will be completed in July.

Sprint's board of directors urges its shareholders to vote in favor of the Softbank offer on June 12.

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